The EUR/CAD pair tried to break above the 1.3750 level again during the Monday session, but failed as we fell rather hard. With this, I think that it’s only a matter of time before the market completely breaks down, and it appears that we are heading to the 1.3550 level first, and then possibly breaking down all the way to the 1.34 handle. With keeps me interested in this pair is the fact that the Euro of course is struggling, and the fact that the 38.2% Fibonacci retracement level is right there. Have no interest in buying the Euro right now, especially when it comes against a North American currency.
Even though the oil markets are bit soft right now, think of this as “Europe versus North America.” The United States is the destination for 85% of the exports coming out of Canada, so they have that working for them in the Great White North. With that being said, I believe that we will eventually break down but short-term rally should continue to be selling opportunities.
Selling rallies
I continue to sell rallies on short-term charts, as I believe it’s only a matter of time before the marketplace breaks down and not only tests the recent lows, but probably breaks well below there. If that happens, I don’t see any reason why this pair will go down to the 1.30 handle given enough time. On the other hand, we could break out to the upside and above the 1.3750 level, which would be very interesting for me as it has been tested so many times. If he gets broken to the upside, I would have to believe that we would head to the 1.40 level, which of course is the 61.8% Fibonacci retracement level, which is a common place for markets to retrace to. With that, I would only become more aggressively short. However, I an am and not against buying this pair between the 1.3750 level and the 1.40 handle. Nonetheless though, I believe that we continue to go much lower.
